What would it mean for a bank to be self-driving?
Presumably, such a financial institution would automatically whisk customers to their financial goals, whether those are to earn interest income, originate or pay off a mortgage, obtain more credit or save for college. Perhaps bank customers would begin to think of themselves as “back-up drivers” who must take the wheel only when, for example, fees become exorbitant or a mis-routed payment comes to their attention.
Stepping back, one realizes the parallels between cars and banks aren’t that neat.
- For starters, autonomous cars don’t take into account where you want to go tomorrow, a year from now or over the next 5-10 years. Instead, the driver provides a single destination or a series of destinations that he or she wants to visit and the autonomous car drives to those locations (and hopefully only those locations). By contrast, we use financial institutions to try to achieve a variety of goals – or destinations – over a period of overlapping intervals from milliseconds (say, payments) to more than 30 years (saving for retirement or managing a mortgage). Within a few hours we know if a car has been successful. For the self-driving bank, it may be many years before we know whether we’re heading in the right destination.
- For all their supposed artificial intelligence-based skills, autonomous cars also don’t do much “thinking” about user contingencies. Sure, self-driving cars traverse the least-congested routes, but do they know anything about when their passengers will get hungry, when they’ll need to use a rest room or when they’ll change their minds about visiting the world’s largest ball of twine? As financial consumers, the changes we routinely experience – changes in income, changes in family, loss of job, inheritance or unexpected medical needs – can have a profound impact on what we need from our financial institutions and when we need it. Ideally, we’d want self-driving banks to be prepared for and even anticipate our contingencies.
- Autonomous cars typically offer only a single mode of transport. At least for the moment, self-driving cars can’t take us to places where a plane, a train, a boat, an elevator, a pair of hiking boots or a combination of these modes of transportation are required. Yet, we’re enamored with these single-mode-of-transport vehicles. By contrast, it is hard to imagine getting to our financial goals without a combination of modes. We don’t just need a savings or checking account, we need credit facilities, various methods of payment (70 percent of us still carry cash!) and a variety of investment vehicles. While we may expect our cars to only deliver us safely to a set destination, we count on our banks to offer a flexible and changing array of services to match our earning and spending goals. We don’t want to live into the future with only the features the self-driving bank had when we first began using it.
As these differences suggest, the complexity required to design a self-driving financial institution is far more than that required of building a self-driving vehicle. But banks should take inspiration from the autonomous vehicle industry, recognizing the value in creating certain autonomous financial customer journeys. The success of such features as automatic bill pay and investment sweep accounts have already told us this.
Financial institutions that are crafting intelligently automated experiences for their internal users and external customers know they must integrate a portfolio of autonomous customer journeys into compelling solutions. This requires working with a fintech mindset that champions the idea of quickly launching specific value-added functions and continuously iterating, not only to take advantage of advances in technologies and platforms, but to meet evolving customer needs. Just think about how many iterations of self-driving cars have already been tested before any have really hit the road.
ISG helps financial institutions build solutions and ecosystems to help them stay ahead of the constantly changing market. Contact us to find out how we can help you.
About the author
A talented practitioner and prolific and engaging industry speaker, Alan has been widely published, covering topics including automation, retail banking, automation, merger and acquisition integration, repatriation services and globalization. With an extensive background in financial services that spans more than 20 years, Alan was a founding partner of ISG’s Global Banking, Financial Services and Insurance practice. Throughout his career, he has helped lead global sourcing and M&A transactions exceeding three billion dollars in value, including the largest-ever banking BPO deal. His work with more than 40 ISG clients includes advising on transformational business models. He has worked with leading global banks, brokerages, asset managers, insurers and private equity companies throughout the U.S. and Europe.